Pakistan’s current account posted a deficit of $681 million in FY2023-2024, massively lower by 79% than the deficit of $3.275 billion in the previous fiscal year, revealed data released by the State Bank of Pakistan (SBP) on Friday.
The CAD amounts to 0.2% of GDP, which is the lowest in the last 13 years, said brokerage house Arif Habib Limited (AHL).
“This significant decline was driven by a 6% reduction in the trade deficit and an 11% increase in remittances,” it added.
In FY24, the country’s total export of goods and services amounted to $38.9 billion. Imports clocked in at $63.3 billion during the period, according to SBP data.
Pakistan’s current account posts deficit of $270mn in May 2024
Worker remittances clocked in at $30.25 billion, as increase of 11% as compared to the previous year.
Monthly deficit
On a monthly basis, Pakistan’s current account posted a provisional deficit of $329 million in June 2024 compared to a revised deficit of $248 million in May 2024, the SBP data revealed.
“This came higher than expectations due to higher Balance on Primary deficit of $1.1 billion,” said brokerage house Topline Securities in a note.
“To note, primary deficit is coming over $1 billion for second consecutive month as SBP is clearing backlog of profit/dividends repatriations, we believe,” it added.
Low economic growth along with high inflation have helped curtail Pakistan’s current account deficit with an increase in exports also helping the cause. A high interest rate and some restrictions on imports have also aided the policymakers’ objective of a narrower current account deficit.
During June 2024, Pakistan’s exports of goods and services stood at $3.07 billion, while imports clocked in at $5.69 billion.
Meanwhile, remittances in June clocked in at $3.16 billion.
The current account is a key figure for cash-strapped Pakistan which relies heavily on imports to run its economy. A widening deficit puts pressure on the exchange rate and drains official foreign exchange reserves.
Last week, Pakistan managed to secure a 37-month, $7-billion Extended Fund Facility (EFF), merely months after concluding a $3-billion Stand-By Arrangement.